Sanguinetti favored the formation of a bloc of debtor countries in Latin America to renegotiate the foreign debt. To that end, in the late 1980s Uruguay joined the Cartagena Consensus (of which Iglesias was secretary) on the foreign debt. Uruguay hosted the temporary secretariat of the Cartagena Consensus follow-up committee, a group of Latin America's eleven most indebted countries.
Uruguay also participated in the Group of Eight, a permanent mechanism for consultation and political coordination that succeeded the Contadora Support Group in December 1986. Like the Contadora Support Group, the Group of Eight advocated democracy and a negotiated solution to the Central American insurgency. It consisted of Argentina, Brazil, Colombia, Mexico, Panama, Peru, Uruguay, and Venezuela. The Sanguinetti government advocated a diplomatic solution to the insurgency in Central America based on the Caraballeda Declaration, a document drawn up on January 12, 1986, by the Contadora Support Group.
The Sanguinetti administration, after direct negotiations with Cuba, resumed Uruguay's commercial and cultural ties with the island nation in April 1985 and diplomatic and consular relations on October 17, 1985. It also reestablished diplomatic relations with Nicaragua. Uruguay had discontinued its diplomatic and consular relations with Cuba on September 8, 1964, in compliance with the decision of the OAS General Assembly, which sought to isolate the regime of Fidel Castro Ruz.
The Sanguinetti government's differences with Cuba's political, social, and economic system, as well as with some foreign policy issues, remained. For example, Sanguinetti disagreed with Castro's proposal to discontinue payment on the Latin American foreign debt. Sanguinetti believed that the resulting financial and commercial isolation would provoke much worse problems. In his view, the Cartagena Consensus, rather than a meeting in Havana, was the appropriate forum in which to discuss the debt issue. Both countries strengthened bilateral relations, however, by signing commercial agreements in May 1986 and March 1987 and by signing a five-year economic, industrial, scientific, and technical cooperation agreement on the latter occasion.
Sanguinetti considered regional integration in the Río de la Plata Basin the key to Uruguay's foreign policy. Uruguay's efforts at promoting integration were aided in the late 1980s by the emergence of democratic governments in Argentina, Bolivia, Brazil, Chile, Peru, and Paraguay. Sanguinetti sought a closer relationship with Argentina, Brazil, and Paraguay in the belief that Uruguay's future was closely linked to the possibility of the integration of the Río de la Plata Basin. Although the Sanguinetti government supported Argentina's claim to sovereignty over the Falkland Islands (Islas Malvinas), it adopted a neutral stance in the conflict between Argentina and Britain (which waged the South Atlantic War over the islands from April to June 1982) and made known its desire that military bases and other facilities not be installed in the South Atlantic. In May 1985, Argentina and Uruguay signed the Declaration of Colonia, which established the framework for promoting economic and social integration between the two countries.
Sanguinetti initiated a similar program of integration with Brazil. In August 1985, the Brazilian and Uruguayan presidents strengthened bilateral relations by holding the first meeting of the General Coordinating Commission and signing thirteen bilateral accords. The presidents of Argentina, Brazil, and Uruguay met in Brasilia in 1986 to advance their integration process. In January 1990, Sanguinetti hosted an official visit by the Paraguayan president, Army General Andrés Rodríguez Pedotti, during which integration matters such as the River Transport System (consisting of the Río Paraguay-Río Paraná-Río Uruguay waterway) were discussed.
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